Schwartz: A CEO on a Mission

About two weeks into her new job as CEO of Mission Federal Credit Union in 2008, Debra Schwartz got a call from the NCUA.

“We have conserved WesCorp.” the voice on the other end said. “You have to write down your entire investment from there.”

Those words would, understandably, thoroughly rattle any CEO, especially a new one during the tumultuous time period when the economy plunged into the Great Recession. But throughout her career, Schwartz has never turned down a challenge because it usually leads to new growth and opportunities, she said.

“If you wait until you are ready, you’re never going to do it, so just do it,” said the 60-year-old CEO, who is now part of an elite club, as only 15% of the industry’s billion-dollar credit unions are led by female executives. “I wasn’t ready to be CEO. I thought I was going to be second in command when I joined Mission Fed.”

That mindset helped her put the $22.9 million loss into perspective as it became a springboard for opportunities that led to more than 10 years of strong and steady growth of Mission Federal’s assets, loans and members.

“It was exceptionally challenging. It was certainly a lot of long hours, but it was exciting because I could see we were making a ton of progress,” Schwartz recalled. “A lot of my team is still here from the beginning and they laugh about what I said at one of my early meetings, which was we are going to make $1 this year [in 2009]. I don’t care what it takes, but we are going to be positive. What we need to do is to make $1 this year. We’re not going to show another year when we lose money. Everybody rallied around that.”

Mission Federal ended up making a lot more than $1 in 2009 – it posted a net income gain of $19 million. In that year, total loans were at $1.2 billion, assets at $2 billion and members at 137,387. Fast forward to the end of this year’s second quarter and it stands at $2.8 billion in total loans, $4.4 billion in assets and 258,640 members. Today, Mission Federal is California’s 11th largest credit union by assets.

Schwartz was quick to note, however, that Mission Federal’s success is not just because of her leadership efforts.

“I’ve been lucky enough to be successful because of the people around me,” she said. “I’ve had great support from the board, a great executive team, and a very loyal and hardworking staff. It is never, ever one person and it’s certainly not me. It’s a team effort.”

Interestingly enough, Schwartz never thought about becoming a CEO while holding top executive positions at other credit unions. But that all changed when she helped Mission Federal get out of a jam before she joined it, leading her to become the CEO at the San Diego-based credit union.

She had been working as the CFO for another credit union that was one of Mission Federal’s competitors. Schwartz heard Mission was going through some financial challenges and knew of an accounting rule change that could save the credit union a lot of money.

So in the cooperative spirit, she called Mission Federal and walked associates through the accounting rule change. The CEO found out and began recruiting her, but she turned down those initial offers because she liked her current job and boss.

In fact, the thought of ever becoming a CEO hadn’t entered her mind because she also enjoyed being the second in command, rolling up her sleeves and getting the work done.

“Then they finally came back and offered me a position where I would be the second-in-command,” she recalled. “I enjoy a challenge. I thought Mission Fed had good bones and I really honestly felt I could help them a lot. I anticipated staying in that position for a number of years when the CEO, within six months of me getting here, announced that he was going to be retiring.”

That surprised her, and at that time Schwartz was working on what she described as “binders of examination findings” and other issues that needed to be addressed for the NCUA.

“I have a pretty good relationship with the NCUA and they actually said to the board, ‘You know who should be the next CEO? It should be Debra,’ which pretty much made my board think, ‘Please, don’t tell us what to do,’” Schwartz recalled.

Nevertheless, the board asked her to create a strategic plan, and after submitting it, Schwartz was named interim CEO. Even though the board conducted a national search for a new leader, its members decided to make Schwartz the permanent CEO.

She realized what was hampering the credit union’s growth was that previous strategic plans included too many priorities. So instead, she created a strategic plan with just four priorities: Financial soundness, crisis management, member growth and operational efficiency.

“I’ve always felt that you can’t focus on more than three or four strategic initiatives and that you need to home in on three or four priorities. It was a wonderful opportunity because when a company is having difficulties, people are hungry for direction,” Schwartz explained. “We needed to keep laser-focused on three or four strategic initiatives and make decisions through that lens. It was really helpful and people definitely got on board with them.”

While financial soundness, operational efficiency and crisis management are very important priorities, the driver of growth has been and continues to be retaining and attracting new members.

Schwartz said she believes the credit union’s 32-branch network was central to member growth. Before joining the credit union industry, she worked as a part-time teller for a California savings and loan while she attended graduate school at the University of Southern California. At 25, she became a branch manager, and two years later, she was running the institution’s branch network. That experience helped her land her first credit union job as EVP of the branch network at the $9.2 billion San Diego County Credit Union.

In her first year as CEO at Mission Federal, she visited all of the branches, which she still does annually, to establish a good rapport with frontline employees who are face-to-face with members every day.

“When I worked in the branch, I remembered how much it meant to me when the CEO or someone came out to see our branch,” Schwartz said. “I really enjoyed that and I was hopeful that my frontline employees would enjoy it and that they’ve learned something, as I always learn something.”

After Schwartz visited the branches that first year, she learned employees were unable to answer key questions such as how many members their branches served, or how many deposits and loans they managed.

Schwartz changed that and got branches to set new account opening goals every year, stepped up member retention efforts and launched an incentive member referral program.

“We’re really focused on member referrals, and we’ve developed campaigns with some financial incentive,” she said. “We find it still to this day that more than 50% of our new members come from the word-of-mouth of our members who are telling other people that they love Mission Fed.”

Just like the branches, Schwartz noted the credit union’s call center and marketing support staff also play an important role in retaining and attracting new members.

“It is the job of everyone who works at Mission Fed to grow our membership,” Schwartz said.

But Schwartz is again quick to point out that Mission Federal’s success happened because of the hard work and talents of her executive team and staff of nearly 600 employees.

“You don’t do anything by yourself. I know where my roots are and I know I’m exactly like everybody else,” Schwartz reflected. “I’m not any better than anybody else. I’m not any smarter than anybody else. I might work a little harder. When I talk to my team I hope it comes across that I’m just another person. I just happen to have a title, I’ve been lucky, I’ve worked hard and I do my best. I try to do my best for our members. I try to do my best for our employees. I try to do my best for our community. I think people sense that I try.”